The huge outlay, lauded by Treasurer John Lenders as "two health budgets in one year", will be bolstered by $935 million in GST funding flowing from the states' recent hospitals-takeover tussle with the federal government.

With a roaring 3.25% growth forecast for the state's economy in 2010/11, Mr Lenders was bullish about its prospects, saying 92% of the full-time jobs created in Australia last year were in Victoria.

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Boost to health system, myki delayed

The health splurge incorporates a $2.3 billion hospitals building program - including $473m for the new Bendigo Hospital - and $1.7 billion to improve equipment and services.

Also set for funding is the $407 million redevelopment of Box Hill Hospital, Sunshine Hospital ($90 million), the $70 million expansion of the Austin Hospital's cancer centre and planning for a new hospital in Geelong.

Regional Victorians have done well out of the budget with an extra $2000 leg-up for regional first-home buyers and more than $500 million to start building the new Regional Rail Link project extending 50 kilometres of new tracks from Southern Cross Station to Werribee.

Less happily for the government, budget papers predict the troubled myki smartcard system will not be working on trams and buses until at least September this year.

Home bonus scrapped

With property high in the public mind, changes to the first home buyers grant have emphasised the government's message to those struggling to buy a home: build instead.

Victorian first home buyers purchasing existing properties will be $2000 worse off, but those buying newly constructed homes will have up to $4000 extra to put towards a deposit from July 1.

The government will extend the first home buyers bonus for another 12 months.

However, the scheme has been revised so that money currently available to all first home buyers will be channelled exclusively to those building or buying newly constructed homes.

An extra $4000 will be available to first home buyers buying newly constructed properties in regional areas, taking their total entitlement to $26,500.

Those buying in metropolitan Melbourne will receive $2000 extra, up to $20,000.

Despite the scrapping of the state bonus, first home buyers purchasing existing properties will still be eligible for $7000 under the federal scheme.

Victoria's super-heated housing market has been a huge boon to government coffers, delivering $3.7 billion last year - a jump of 5% or almost $900 million in just two years.

Land tax has also helped Victoria's bottom line, with revenue growing 12% to $1.4 billion.

Also given a high-profile push before the budget was Victoria's Police's boosted $2 billion kitty, helping to pay for an extra 1966 frontline officers and neutralising one of the opposition's major election commitments.

Extra law and order funding revealed today included $98.1 million in funding to establish a new centre for the police homicide, fraud, drug and sex crimes squads and $16.7 million for an automated number plate recognition system.

The state's prisons are set to expand, with $45.6 million to provide another 85 beds for male inmates, while $62.3 million will be spent in an effort to speed up the court system.

Numbers on the bench will also receive a boost, with salaries allocated for two more County Court judges, one Supreme Court judge and an additional two magistrates.

Emergency services will receive $254 million over five years to boost bushfire preparedness.

The state's business lobby also has reason to smile, with an incremental payroll tax cut of 0.05%, down to 4.9%, freeing up some extra cash for investment.

Extra 30,000 jobs

Speaking to reporters after the release of the budget papers, the Treasurer compared the context of this year's budget to the last, which was dominated by the aftermath of the Black Saturday bushfires and the global financial crisis.

With 92% of all full-time jobs in Australia created in Victoria over the past year, job security and growth were a central feature of the $872m surplus budget, Mr Lenders said.

Building on the state's stellar jobs result, a $9.5 billion government infrastructure program would help secure an extra 30,000 jobs in the next financial year, he said.

"Victoria has become a byword for other Australian states because it made the difficult decisions in the good years," he said.

While state revenue had not fully recovered from the GFC, Mr Lenders pointed to increased business and consumer confidence as proof of the government's good management.

Adopting Prime Minister Kevin Rudd's mantra of support for "working families", he said the government had "delivered every single financial commitment made in 2006".

"It"s no coincidence that optimism has risen - when you have business confidence and consumer confidence it is reflected in jobs in that community," he said.

However, Mr Lenders tempered his glowing economic appraisal by pointing to the recent financial strife in Europe as evidence of continuing global uncertainty.

4 May
Victoria has been on a roll for a long time, and with a state election looming, today's state budget by Treasurer John Lenders is about staying on course. There are few surprises. It's steady as she goes.